Starbucks has reported strong Christmas sales attributed in part to a taste among the public for eggnog lattes served up alongside free Wi-Fi and music downloads, the company has reported.

Kris Engskov, managing director of Starbucks UK & Ireland, said some of the company's UK cafes had enjoyed their strongest trading since the US firm entered Britain 14 years ago.

Sales of festive drinks, such as the eggnog and gingerbread lattes, rose 10% over Christmas compared with last year, contributing to what was the UK chain's 10th quarter of underlying sales growth, although the US listed group did not break out country sales for the first quarter.

"In a very tough economy people are still going to treat themselves. For £2 you can do something that makes you feel good," Engskov said.

With family budgets under pressure the chain ran promotions to stimulate sales, such as "buy-one-get-one free" drinks and free iTunes downloads linked to its loyalty card.

"Customers are thinking carefully about how they spend, which is why we have to offer them more for their money."

This week McDonald's also reported robust UK sales as consumers continued to seek out affordable treats, including burgers, rather than splash out on new outfits and other big purchases.

The burger chain said Christmas shoppers had flocked to its restaurants to "refuel" on cheap burgers; underlying sales were up more than 10% in the last three months of 2011.

At the end of last year Starbucks trumpeted plans to create 5,000 jobs in Britain over five years by opening 300 outlets on high streets and motorways, as well as US-style "drive-thrus".

On Thursday Starbucks also announced plans to spend £8m refurbishing 70 coffee shops in the London area, ahead of the Olympics. Britain is its third biggest market after the US and Canada. Engskov said the group also planned to team up with franchise partners to expand the business: "We want to get to places we have not been able to get to."

Starbucks said that 7,000 of its 9,500 UK staff would receive £400 worth of free shares, dubbed "bean stock", after the company enjoyed record annual sales last year. Its founder, Howard Schultz, introduced the scheme. Staff become eligible to sell 50% of their shares after one year, with the remainder released over the following two years.